DISTRIBUTION GAMES CORPORATION, THANE V. ACIT CIR 1, THANE

ITA 5052/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78671 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-04-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 17-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJIV PHATTANKAR
• Keywords: Opportunity of being heard; Assessment record

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , !' #$%& , !' () ! BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./I.T.A. NO. 5052/MUM/2010 ( * * * * / ASSESSMENT YEAR :2006-07 M/S. DISTRIBUTION GAMES CORPN., 4, NEW FURIA NIWAS, OPP. SHIVSENA SHAKHA KHOPAT, THANE-400 601 MAHARASHTRA THE ACIT, CIRCLE-1 THANE )+ !' ./ ,- ./PAN/GIR NO. : AADFD 4649K ( +. /APPELLANT ) .. ( /0+. / RESPONDENT ) +. 1 ! / APPELLANT BY : ` SHRI RAJIV PHATTANKAR /0+. 2 1 ! /RESPONDENT BY : SHRI SANJEEV JAIN 2 3' / DATE OF HEARING :16.4.2014 45* 2 3' / DATE OF PRONOUNCEMENT :16.4.2014 (!6 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-11, THANE DT.1.02.2010 PERTAINING TO ASSESSM ENT YEAR 2006-07. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS AGAINST UP HOLDING OF THE DISALLOWANCE MADE U/S. 40A(IA). ITA NO.5052/MUM/2010 2 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEB ITED FOLLOWING EXPENDITURE TO ITS PROFIT AND LOSS ACCOUNT: 1) CONSULTANCY CHARGES RS. 1,79,951/- 2) MARKETING SERVICE CHARGES RS.13,45,000/- 3) REPAIRS & MAINTENANCE RS. 59,650/- IT WAS EXPLAINED THAT CONSULTANCY CHARGES AND MAR KETING SERVICE CHARGES WERE PAID TO M/S. DGS-DISTRIBUTIONS & E. SO LUTIONS PVT. LTD. AND RS. 51,000/- WERE PAID TO MR. GULERIA. THE SAM E WAS DEBITED TO REPAIRS & MAINTENANCE ACCOUNT. THE AO SOUGHT EXPLAN ATION FROM THE ASSESSEE AS TO WHY TDS HAS NOT BEEN MADE ON THESE P AYMENTS AND WHY THE SAME SHOULD NOT BE DISALLOWED U/S. 40A(IA) OF T HE ACT. IT WAS EXPLAINED THAT THERE WAS A CONTRACT WITH M/S. DGS-D ISTRIBUTIONS & E. SOLUTIONS PVT. LTD. FOR THE MARKET RESEARCH AND SUR VEY AND BECAUSE OF SOME DISPUTE THE SAID CONTRACT COULD NOT BE COMPLE TED AND THEREFORE THERE WAS NO LIABILITY OF TDS. RS. 51,000/- DEBITE D TO REPAIRS AND MAINTENANCE WERE PAID AGAINST TECHNICAL SERVICES RE NDERED BY MR. GULERIA. THE AO DID NOT ACCEPT THE CONTENTION OF T HE ASSESSEE AND ADDED RS. 1,72,501/- TOWARDS CONSULTANCY CHARGES RS. 13,2 2,501/- TOWARDS MARKET SERVICE CHARGES AND RS. 51,000/- TOWARDS REP AIRS AND MAINTENANCE. THE TOTAL DISALLOWANCES WERE TO THE TUNE OF RS. 15, 46,002/-. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. IT WAS EXPLAINED BEFORE THE LD. CIT(A ) THAT THE PAYMENTS MADE TO M/S. DGS-DISTRIBUTIONS & E. SOLUTIONS PVT. LTD. WERE NOTHING BUT REIMBURSEMENT OF EXPENSES THEREFORE THERE WAS N O LIABILITY OF TDS AND THE EXPENSES OF RS. 51,000/- PERTAIN TO REPAIR CHARGES OF CERTAIN ITA NO.5052/MUM/2010 3 ELECTRICAL EQUIPMENTS WHICH INCLUDED THE COST OF S PARES, STORES & SERVICE CHARGES. THE LD. CIT(A) WAS OF THE FIRM BELIEF THA T TAX WAS REQUIRED TO BE DEDUCTED ON THESE PAYMENTS AS PER PROVISIONS OF SEC. 194J FAILING WHICH THE AO HAS RIGHTLY DISALLOWED THE PAYMENT U/S . 40A(IA) OF THE ACT. 5. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LD. CIT(A). 6. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED TH E FINDINGS OF THE AO. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES AND THE RELEVANT MATERIAL EVIDENCE BROUGHT BEFORE US. IN OUR CONSIDERED VIEW, NEITHER THE FACTS HAVE BEEN PROPERLY APPRECIATED B Y THE AO NOR THE ASSESSEE HAS BEEN ABLE TO SUBSTANTIATE ITS CLAIM BE FORE THE AO. IN EITHER OF THE SITUATION, IN THE INTEREST OF JUSTICE AND FA IR PLAY, IN OUR CONSIDERED VIEW, THIS ISSUE NEEDS TO BE DECIDED AFRESH. WE, T HEREFORE, RESTORE THIS ISSUE BACK TO THE FILES OF THE AO. THE AO IS DIREC TED TO VERIFY THE CLAIM OF THE ASSESSEE THAT AS PER MARKET RESEARCH ASSIGNM ENT, THE PAYMENTS MADE TO M/S. DGS-DISTRIBUTIONS & E. SOLUTIONS PVT. LTD. WERE NOTHING BUT REIMBURSEMENT OF ACTUAL AMOUNT SPENT BY THE SAI D FIRM. THE ASSESSEE IS DIRECTED TO SUBSTANTIATE ITS CLAIM BY BRINGING C OGENT MATERIAL EVIDENCES ON RECORD TO THE AO. AS PERMANENT ACCOUNT NUMBER O F M/S. DGS- DISTRIBUTIONS & E. SOLUTIONS PVT. LTD. IS AVAILABLE ON RECORD, THE AO IS ALSO DIRECTED TO VERIFY FROM THE ASSESSMENT RECORDS OF M/S. DGS- DISTRIBUTIONS & E. SOLUTIONS PVT. LTD. IN SO FAR A S PAYMENT OF RS. 51,000/- IS CONCERNED, THE ASSESSEE IS DIRECTED TO SUBSTANTIATE ITS CLAIM THAT THE SAME WERE INCURRED ON THE REPAIRS OF CERTA IN ELECTRICAL EQUIPMENTS WHICH INCLUDED THE COST OF SPARES, STORES & SERVICE CHARGES. THE AO IS ITA NO.5052/MUM/2010 4 DIRECTED TO VERIFY THE SAME AFTER GIVING A REASONAB LE AND FAIR OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH APRIL, 2014 (!6 2 5* '! 7 8( 9 16.04.2014 5 2 : SD/- SD/- (H.L. KARWA ) (N.K . BILLAIYA ) / PRESIDENT !' () / ACCOUNTANT MEMBER MUMBAI; 8( DATED 16.4.2014 . . ./ RJ , SR. PS (!6 (!6 (!6 (!6 2 22 2 /3# /3# /3# /3# ;!#*3 ;!#*3 ;!#*3 ;!#*3 / COPY OF THE ORDER FORWARDED TO : 1. +. / THE APPELLANT 2. /0+. / THE RESPONDENT. 3. < ( ) / THE CIT(A)- 4. < / CIT 5. #=: /3 , , / DR, ITAT, MUMBAI 6. : > / GUARD FILE. (!6 (!6 (!6 (!6 / BY ORDER, 0#3 /3 //TRUE COPY// ? ?? ? / @ @ @ @ , , , , (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI